San Diego's 2011 Water Rate Hike: Fallout from the S.P.U.D. Protest

Posted January 27th, 2011

First, we’d like to THANK all of our members (and non-members!) who supported the SPUD protest. Whether you sponsored a rotten potato against the San Diego Public Utilities Department (SPUD), mailed in a protest form, or voiced your frustrations at City Hall, we REALLY appreciate every ounce of your support! Read UCAN's letter to the City Council, dated January 24, 2011.

Though the City of San Diego approved the water rate increase, our campaign was successful. We generated enough support to grab the attention of council members and many media sources: There’s something rotten at SPUD and enough is enough! We reminded SPUD and City Council that UCAN will not let any rate increase go through without a fight. We will be there to fight for the rights of San Diego water customers!

Before Monday’s council meeting, we set up camp outside City Hall. Surrounded by onlookers and media reporters, we displayed the messaged potatoes, distributed information, and called for the public to fight this rate increase. During the meeting, dozens of citizens urged the Council NOT to approve the rate hike, including many whose water service will be shut-off because they cannot afford to pay water bills. Other angry residents told the Council raising rates is an unfair way to reward conservation efforts.

Only two people commented in favor of the rate increase. Not surprisingly, they both happen to be members of the City’s rate-oversight committee.

Our own Bianca Garcia and Dave Peffer also raised several key points during the meeting:

Despite what SPUD wants you to believe, the City has enough money in reserve funds to absorb this rate increase. SPUD will collect $25 million from ratepayers in this rate hike. However, the City has $35.6 million in reserve funds set aside for offsetting rate increases! Instead, the City chooses to pass the burden to residents during a period when thousands can’t afford to pay bills;

SPUD claims the money in reserve funds is “needed” for capital improvement projects, mainly replacing pipelines. However, we know that SPUD cancelled or delayed many of these projects, so it has surplus funds for offsetting this rate increase. Instead, SPUD set aside $25 million to cover employees’ fringe benefits, which are already 64% of total budgeted annual salaries;

Over the past 4 years, SPUD over-estimated the amount it needed to collect from ratepayers in rate hikes. SPUD used an annual inflation rate of 4.0% in its last Cost of Service Rate Study, but the actual average inflation rate over the past 4 years has been less than 2.0%. This extra money should be used to offset the rate increase;

San Diego water rates have increased by 67% over the past 4 years! Alarmingly, less than half of this increase is due to SPUD’s water purchases. The majority of money collected from ratepayers pays for SPUD salaries and benefits, operations and maintenance, debt servicing, and administrative costs;

The City must eliminate the convenient “pass-through” mentality adopted over the years. SPUD should scrutinize pass-through charges from water wholesalers more effectively. Simply passing this burden to ratepayers, like so many times before, is NOT acceptable.

In the end, council members approved the rate increase (DeMaio, Emerald - Nay; Young, Lightner, Faulconer, Gloria, Zapf, Alvarez – Yea). We are disappointed with those council members who chose to hide behind SPUD’s weak justifications.

For next year’s rate hike, we will fight even harder. We will start our protest campaign earlier, fight the City for better measures to inform the public of its right to protest, and urge members to contact their local council member to voice their opposition. We just need to convince two more City Council members that these rate increases are unjustified. We hope council members will FINALLY start listening to their constituents. Instead of letting water wholesalers get away with raising rates without adequate justification, our leaders need to TAKE A STAND against future pass-through charges!

About UCAN

UCAN has represented the interests of San Diego County utility customers since 1983. UCAN focuses its efforts on the rates and services of San Diego Gas and Electric Company, telecommunications utilities and the City of San Diego Water Department.